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26 Cards in this Set

  • Front
  • Back
5 simplifying assumptions when examining production possibilites
1. all available resources will be used fully
2. all abailable resources will be used efficiently
3. quantity and quality of resources not changing
4. technology not changing
5. can produce only two goods
3 basic economic questions
1. what to produce
2. how to produce
3. to whom to produce it
5 factors that affect demand
1. consumer income +
2. price of related goods (sub +, comp -)
3. expected prices +
4. taste and preferences +
5. number of consumers +
6 factors that affect supply
1. cost of resources and production -
2. expected price -
3. technology and productivity +
4. taxes -, subsidies +
5. number of suppliers
6. weather, natural disasters, war
5 factors that cause demand curves to shift
1. change in the number of consumers
2. change in the tastes of consumers
3. change in consumer incomes
4. change in the price of compliments and substitutes
5. change in consumer expectations of future price
5 market failures
*1. public goods and services
*2. spillovers
*3. market power/lack of competition
*4. economic instability
5. imperfect information
3 distinguishing characteristics of the farm sector
1. inelasticity of farm goods
2. immobility of resources
3. extensive technological change
4 governmental policies toward agriculture
1. price supports
2. programs to restrict supply
3. target prices and deficiency payments
4. efforts to increase demand
5 ways to deal with a surplus
1. store
2. sell overseas
3. give as aid overseas
4. give as aid domestically
5. destroy
3 common factors of price supports, supply restriction, and target prices
1. redistribute income from taxpayers to farmers
2. benefit larger farms (reward output by unit)
3. target the supply side of the market
2 advantages of the federal government controlling environmental policy
1. larger taxbase
2. easier to implement 1 national law than 50 different laws
1 disadvantage of the federal government controlling environmental policy
2. insensitive to local needs
3 methods to regulate pollution
1. standards
2. pollution fees
3. pollution permits
2x2 classifications of standards
1. performance
2. design

1. uniform
2. specific
3 steps to implementing standards
1. licensing or certification
2. monitoring
3. feild surveillance
2 types of pollution fees
1. effluent fee (water)
2. emission fee (air)
2 factors that strain the environment (dealing with overpopulation)
1. more people than available resources
2. too much output and consumption of goods
4 types of market structures
1. pure competition
2. monopolistic competition
3. oligopoly
4. pure monopoly
4 characteristics of pure competition
1. large number of sellers and buyers
2. sells a standardized product
3. no barriers to entry or exit
4. equal access to information for and by sellers and buyers
5 barriers to entry
1. difficulty in raising capital (start-up cost)
2. economies of scale
3. ownership to a unique resource
4. government restrictions
5. behavior of existing companies
4 legal or government restrictions
1. patents, copyrights, trademarks
2. regulation
3. tariffs on imported goods
4. licenses, franchises, and CCN's
2 behaviors of existing companies
1. limit pricing
2. predatory pricing
3 weaknesses of concentration ratios
1. only focuses on industry, not whole market
2. doesn't consider import competition
3. doesn't take regional aspects into account
3 adverse affects of market power
1. collusion
2. economic inefficiency
3. price discrimination
4 forces that limit market power
1. antitrust
2. import competion
3. technological change
4. regulation and deregulation
6 factors that cause supply curves to shift
1. change in the number of sellers
2. change in the price of resources
3. change in the technology used to produce the product
4. change in price of other products produced with the same resources
5. change in government taxes or subsidies
5. change in the sellers' expectations of future price